Why Bank of America is a “Sell” Up Here
- Posted by JC Parets
- on March 27th, 2014
It looks to me like the right thing to be doing right now in shares of Bank of America is to be selling. There are four charts that I’m looking at that all say the same thing: Sell Bank of America!
The first chart helps to put things in perspective. We’re looking at a weekly bar chart running into resistance from 2009 and 2010. Last time prices were up here they fell by 75%. This is a level where the sellers have proven they are in control. I don’t like to fight that:
Bank of America has tripled in the last 2 years. I think it’s now the time to be selling. Here is a relative strength chart showing Bank of America vs the S&P500. Momentum in relative strength is putting in a bearish divergence. With relative prices running into former highs, momentum is already putting in much lower highs:
We are seeing something similar on the daily relative strength chart. Higher highs that failed very quickly combined with another bearish divergence in momentum:
And finally here is a closer look at what is happening today. With the longer-term picture warning us of bigger trouble ahead, we can see in the short-term that we had a failed breakout in price followed by a bearish momentum divergence at recent highs.
A break below 16.70 would confirm a break of the recent uptrend line, it would confirm the bearish momentum divergence, and it would be a lower low which breaks the trend of “higher lows & higher highs”.
I would look for a breakdown below that key level as some big time confirmation. On the flip side, I would take a much more neutral stance in this name if prices break back above 17.65. Up there things get a little bit more messy and would deserve a reevaluation of the bearish thesis.
REGISTER HERE for more information on how to access this top/down technical analysis for other stocks and asset classes
Full Disclosure: Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, please see my Terms & Conditions page for a full disclaimer.blog comments powered by Disqus
J.C. Parets is the Founder & President of Eagle Bay Capital, LLC. He is a 10-year veteran and Market Technician who actively manages money incorporating Technical Analysis and Behavioral Finance into his practice. JC’s work has been featured regularly on CNBC, Fox Business, Bloomberg, Business News Network, Wall Street Journal and Yahoo Finance among many other financial media outlets. More...
- Was That A Failed Breakout in Russell2000?
- When Do We Buy McDonalds?
- How High Can Chipotle Go?
- Is It Time To Buy Apple? Or Is It A Sell?
- Where Are U.S. Treasury Bonds Heading From Here?
- A Top/Down Look at Shares of Google
- Here’s A Look At The U.S. Large-Cap Indexes
- BNN Appearance: Interest Rates and Apple
- This S&P500 Chart Still Makes Me Nervous
- How To Prepare For a Lower Rate Environment
Archive by Year